In examining healthcare expenditures, various factors influence costs. Although we focus a tremendous amount on overutilization, variation, and waste, unit prices are also an essential factor. For example, drug costs constitute a significant focus concerning unit pricing. However, there are other numerous inputs affecting the health services unit cost equation. One of these such areas is payments to physicians.
It is estimated that physician’s services reimbursement comprises 20 % of all U.S. healthcare expenditures. Drilling down even further into the reimbursements, there continues to be a considerable concern that the distribution of payments across medical specialties is not equitable. Meaning, higher payments are being made for procedural based activities versus cognitive-focused areas and preventive services.
The basis for payment is the Relative Value Unit (RVU). Regardless of payments on a fee-for-service or fee-for-value model, physician payments are based on this calculated number for reimbursement. Thus, it is crucial to understand what goes into this calculation so we can identify if there is a cause for possible inequities.
The largest of the three components that comprise a physician’s RVU is physician work, which is defined as the time, intensity, and skill required for performing a given service. The Relative Value Scale Update Committee or RVSUC relies on surveys issued by specialty societies to members who perform the procedures under review. This sounds logical on the surface, but undoubtedly, unintended biases may be in play as well as a small sampling size due to low response rates, thus calling into question the accuracy of the number being used in the calculation. Since several of these measures are measurable in more precise methods, we have the opportunity to evaluate in a more scientific construct.
For instance, a recent study in Health Affairs by Urwin et al., Accuracy of the Relative Value Scale Update Committee’s Time Estimates and Physician Fee Schedule for Joint Replacement examined the accuracy of the “time” component within the RVU equation. When they did time studies and compared them to time submitted, they found an overestimation of time. In fact, it was determined that the operating time of original hip replacements was off by 18%, original knee replacements was off by 23%, revision of hips by 61%, and revision of knees by 48%. Furthermore, they also ascertained that the faster operating time was not associated with increased complications or admissions to the intensive care unit. Having the ability to use this empirical time stamp data is significant. Additionally, the study suggested using this same approach to determine physician payment for other surgical procedures.
Before we start really digging into the equations and explaining time spent on certain procedures, it is vitally important that we remember our focus remains on delivering the ultimate value for the dollars spent. Being accurate in our calculations allows us to distribute the same dollars towards items that enhance quality and service. The exercise is not about how we decrease payments to physicians, but how to improve the value received for a particular unit of service provided. There are multiple ways to advance this concept, such as adding a quality or service measure to the RVU calculation, or creating a set RVU solely based on different measurements of quality and service. As we continue to transition to value payment models, it will be crucial to adjust these equational factors. Doing this will create payment rates that are more accurate and congruent with desired outcomes and needed services. Let us be scientific in our methodologies as we enhance the value received by those we serve.